Commercial Property/The Robert Martin Company; 'Re-Engineering' in the Face of a Changing Market

By MARY McALEER VIZARD

Published: April 3, 1994

THE term "re-engineering" has become the latest buzzword in corporatespeak. Some of the country's largest corporations use it to describe reorganization schemes to meet the competitive demands of the market.

What it has meant lately in the real-estate business is illustrated by the Robert Martin Company, a developer and property owner based in Elmsford, N.Y., in Westchester County.

Robert Martin's younger-generation leadership pronounces the company re-engineered, which means it has de-emphasized new development and focused principally on the management and improvement of its considerable portfolio of properties.

"That's our strength," said Brad W. Berger, president and chief executive officer. "To become more efficient, we have to concentrate on what the company does best."

In the past, Robert Martin has been known primarily as a developer of commercial properties. Founded in 1957, it now owns and manages more than 100 buildings with a total of 7 million square feet of office, industrial and flex space, primarily in Westchester County and in Fairfield County, Conn. In addition, it has developed more than 2,000 housing units in Westchester, and has either helped develop or has a financial interest in residential properties in Connecticut, New Jersey, Washington and Florida.

"Like a lot of real estate businesses, Robert Martin was all over the place, taking advantage of every opportunity that presented itself," said Barry Libert, principal of Aequus Partners, a consulting firm in Boston that has been guiding Robert Martin through its restructuring. "To do business in the future, I'm telling real estate companies that they have to grow up and start acting more like corporations."

The company will continue to build, Mr. Berger said, but only in "nonrisk" situations. An example is a deal now being negotiated to build an 80,000-square-foot distribution facility in Westchester for Federal Express.

"We'll continue to do that kind of nonspeculative development for companies with Fortune 500-type credit," Mr. Berger said.

The company does plan to continue to buy so-called "distressed properties," at 50 to 60 percent of what it would cost to build them. "We're looking at several properties now," Mr. Berger said. "Even if they're only 70 percent occupied, if they have a tenant in hand, we'll take over the property and add value to it renovating it."

But Robert Martin is also negotiating to sell properties it owns, in particular its residential properties in Florida. Among these are town-house rentals that they built with partners in Deerfield Beach, Boca Raton and Coral Springs.

Earlier this year, Mr. Berger, 38, took over operating control of the company from his father, Martin Berger, and Robert Weinberg, the company's founders, who named their enterprise by combining their first names. Both will remain active as co-chairmen of the board. The chief operating officer is Timothy M. Jones, who is also 38. He joined the company four years ago.

"This is really a generational shift," said Mr. Berger. "While the founders were more enterpreneurs, Tim and I are managers, and that will be reflected in the way we do business."

Mr. Berger has been with Robert Martin since he graduated from Yale in 1977. He and Mr. Jones were college roommates. They also played together on the Yale basketball team.

Before joining Robert Martin, Mr. Jones was founder and president of Clifton Companies, a real estate concern in Stamford, Conn. He also was president of the Federated National Company of Pennsylvania, in State College, Pa., handling the real estate and management company's hotel, residential and restaurant properties throughout the Northeast.

Mr. Berger maintains that the decision to reorganize was not a result of any failure on the company's part. "We're still one of the most successful companies in the area," he said, noting that its commerical buildings are 94 percent occupied.

"So if it ain't broke, why fix it?" he asked rhetorically. "Well the fact is that real estate got broken, and we had to change the way we do business in order to thrive in the new marketplace."

ROBERT MARTIN is singularly well-positioned for that, brokers say, since most of its commercial buildings offer flex space, which is adaptable for office, as well as laboratory, research and high-technology uses. "That kind of space is at a premium right now, and Robert Martin is really the only game in town," said Carl D. Silbergleit, executive director at Benson Commerical Realty in Tarrytown.

Also, the company is not burdened with an oversupply of office buildings with large floor sizes, which are now standing vacant all over the New York area.

"Most of our buildings have floorplates of 10,000 to 20,000 square feet, which is what's leasing now," Mr. Berger said.

The company does have major tenants, including I.B.M., which leases three multi-use buildings, totaling 350,400 square feet, at the Mid-Westchester Executive Park in Hawthorne.

"Robert Martin got very lucky when I.B.M. recently renewed its leases on those buildings," said Mr. Silbergleit. "Otherwise, we wouldn't be talking right now about how well Robert Martin is doing."

The new executive team is hopeful that its high occupancy and reorganization efforts will attract outside investment in the company. "We're trying to bring a family business into the 1990's and that will include attracting new sources of capital," Mr. Jones said.

The company is also considering bringing in new investors, although no decision has been made. It believes it has made itself a more attractive investment opportunity by recently refinancing $400 million of debt. "We're meeting the market," Mr. Jones said, "and inviting people in here to see how we do business."

In the past, investors tended to shy away from real estate companies because of their "gun slinger" image, Mr. Berger said. "A lot of these companies started out as mom and pop's," he explained, "and then experienced unprecedented prosperity in the 60's, 70's and 80's, but still operated as small companies. Now there are distinct advantages to acting like a larger company."

BY I.B.M.-type standards, Robert Martin is a small company. It has 110 employees and recently reduced the number of its departments from eight to five. In addition to its substantial property holdings, it also owns 300 acres of vacant land in Westchester and 700 acres in southern New York State and Connecticut that it hopes to sell to other developers.

It recently sold 14.5 acres in Greenburgh in Westchester County to Avalon Properties, of New Canaan, Conn., which plans to build a 105-unit rental apartment complex.

"Rentals are in great demand now," said Mr. Berger. "But they can deliver that kind of project faster than we can. The old Robert Martin would have built it itself."

The company will continue to get rid of any "noncore businesses and assets," said Mr. Libert -- essentially, all their residential properties.

Mr. Libert expects other real estate companies to follow Robert Martin's path in more sharply focusing their real-estate activities.

"I'm now working with businesses with a total of $2 billion in assets," he said. "and I'm talking to $14 billion. This is still cutting edge, but it's catching on. I'm betting my business on it."

Photo: Robert Martin Company executives, left, Brad W. Berger, president, and Timothy M. Jones, operations chief. (Alan Zale for The New York Times)